Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if he will consult with representatives of older FAS and PPF members to explore alternative approaches to compensating people without pension indexation.

The Government has tabled an amendment which provides that compensation payments from the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) on pensions built up before April 1997 will now be linked to CPI-inflation (capped at 2.5%) and apply prospectively for pensioners whose former schemes provided these increases. Pre-97 increases will also apply to the beneficiaries of eligible members.

The change announced to provide pre-97 indexation for PPF and FAS compensation payments will be made for members whose former schemes provided indexation within their scheme rules on a mandatory or statutory basis. The members captured within our reforms lost out when their scheme transferred to the PPF or qualified for the FAS. We do not intend to consult on the matter of pensions indexation in the PPF and FAS.

I understand that members will want to receive compensation quickly, particularly those with a serious illness or limited life expectancy and I am sympathetic to those concerns.

Legislation introducing indexation on pre-1997 service will apply to eligible members suffering serious ill health in the same way that it applies to other members. Those in receipt of an ill-health pension when their scheme entered a PPF assessment period are entitled to 100% compensation, indexed as set out in the proposals.

The Financial Assistance Scheme has the capacity to pay ill health, severe ill health and terminal ill health payments. All three are regular payments rather than in the form of a lump sum. The Pension Protection Fund makes terminal illness payments in the form of a lump sum. Measures in the Pension Schemes Bill are additionally extending the definition of terminal illness so that affected individuals can access terminal illness payments earlier, at a very difficult time of their lives.

The earliest opportunity to provide pre-97 increases to PPF and FAS members is January 2027, the first annual uprating point after the Pension Schemes Bill is expected to receive Royal Assent.